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Gaming Guru

Joe Weinert
 

Atlantic City Roundup

29 March 2004

ATLANTIC CITY -- Six Atlantic City casino hosts took the city's "Always Turned On" slogan too far by helping arrange the service of Asian prostitutes for high rollers, federal authorities said.

The U.S. Attorney's office in Camden, N.J., said the employees were part of a prostitution ring discovered through a tip from the FBI's Seattle office two years ago.

Tom Auriemma, Division of Gaming Enforcement director, said there was no evidence that the four relevant casinos knew anything about the prostitutes.

"I think most people would agree that casinos, whether in Nevada or New Jersey or anywhere else, attract prostitution. We have at times, with the Atlantic City Police Department, conducted raids and arrested prostitutes, but we've never seen anything quite as organized as what we've seen this time," Auriemma said.

The six employees were charged with one count each of conspiring to transport individuals in furtherance of prostitution and interstate travel in aid of racketeering. The six casino employees charged were:

Kevin Chau, 42, a Bally's host.

Michael Chau, 34, Trump Taj Mahal executive director of Far East marketing.

James Kim, 30, Bally's director of Far East marketing.

Chris Lee, 47, a former Showboat host.

Alex Lu, 43, a Resorts host.

Xue Peipong, a Resorts host.

The six were released on $100,000 personal recognizance bonds. If convicted, they face as long as 10 years in prison and as much as $500,000 in fines. They also face gaming-license revocation.

The prostitutes were recruited from Malaysia and other Asian countries, then sent to work at brothels in Philadelphia, Washington and Boston, authorities said. On weekends, they would be bused to Atlantic City to work at casinos.

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Donald Trump's personal popularity appears to be doing wonders for his underperforming casino stock.

Shares of Trump Hotels & Casino Resorts Inc. traded at their highest level in nearly four years, hitting $3.64 - up 38 percent - on Wednesday. More than 2.6 million shares changed hands, or 20 times its recent average volume. "I have no idea why," Trump said after shares closed at $3.19 that day.

The shares of DJT maintained their stronger performance through the week. Four factors appeared to be driving the big gain:

Trump's personal popularity. His hit TV show, "The Apprentice," is building toward its live conclusion next month from Trump Taj Mahal. He just released a book, "How to Get Rich," and he has appeared on numerous magazine covers and commercials lately.

A glowing Trump Hotels story published by CBS MarketWatch, which quoted an Arizona-based analyst as saying DJT shares are "grossly undervalued" and worth "well over $10 per share."

Overall strength in gaming stocks.

Investor expectation that Trump Hotels will succeed with its proposed restructuring, which would result in a $400 million equity investment by Credit Suisse First Boston.

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The ongoing expansion among Atlantic City casinos is good, but what the city really needs is another Borgata-like casino hotel, according to Standard & Poor's.

"Substantial growth demand in Atlantic City is not expected without more significant and sustained reinvestment in the market. The ongoing renovations at a number of properties will help, but a second new property at Renaissance Pointe, adjacent to Borgata, would likely be very beneficial to the long-term success of the market," S&P analyst Michael Scerbo wrote in "Industry Outlook: Odds Are Good for a Healthy 2004 in the U.S. Gaming Sector."

MGM Mirage owns the 95-acre site next to Borgata but has no foreseeable plans to develop the land.

"The Borgata has raised the bar with its quality and package of amenities, and the property is expected to be a leader in the market over the long term," Scerbo said.

Atlantic City gaming revenue grew 2.4 percent last year, to $4.5 billion.

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Internet gambling in New Jersey? Say it ain't so.

OK, it isn't so . although looks that way to players.

The New Jersey Lottery came to the Atlantic City Boardwalk to launch the nation's first Internet lottery game, Cyber Slingo.

The game works this way: Players buy a dollar ticket at any lottery retailer, then sit down at any online computer and log onto the Lottery's Cyber Slingo Web page. Each ticket has a unique number that's input on the Web page. Players get 20 spins on a slot-machinelike computer display to learn whether they have won.

In fact, players are just going through the motions to find out whether they are a predetermined winner. If players don't want to bother with the online aspect, they can check with the lottery retailer to find out instantly whether their card is a winner.

All winning tickets must be redeemed at a lottery retailer. Lottery officials said the game passed "all of the legal contortions and approvals."

"It's an interactive way of playing the lottery game and determining whether you won or lost," said Foster Krupa, the Lottery's marketing and instant game manager.

(Joe Weinert covers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.)